Nordstrom brings leadership for department stores and Rack under one roof

Discussion
Photos: Nordstrom
Apr 06, 2022

Nordstrom on Monday said that it is consolidating leadership for its full-line department stores and its Rack off-price concept under one team in an effort to deliver on its strategy of providing customers seamless shopping experiences across its digital and physical store platforms.

Leaving Nordstrom are Geevy S.K. Thomas, president of Nordstrom Rack, and Scott Meden, chief marketing officer. Messrs. Thomas and Meden are retiring after 39- and 37-years careers with Nordstrom.

“We want to thank Scott and Geevy for their tremendous contributions to our company, our employees and our customers,” Pete Nordstrom, president and chief brand officer of Nordstrom, Inc., said in a statement. “Scott has been a selfless leader who always put our customers and our people at the center of everything we do. Geevy has been a dynamic force and helped create the close-knit culture for which Nordstrom is known. Few leaders have made such a meaningful impact on so many distinct aspects of our business.”

Nordstrom announced that Ken Worzel has been named chief customer officer for the entire organization and Jamie Nordstrom will do the same as its chief stores officer.

A company press release explained Nordstrom’s thinking.

“By centralizing the customer strategy under one leader and consolidating responsibility for store operations across Nordstrom and Nordstrom Rack, these expanded roles will better align operational oversight with the company’s ‘Closer to You’ strategy, which remains focused on delivering customers a more convenient and interconnected experience across its stores and digital platforms.”

Mr. Worzel, who has been the architect of Nordstrom’s Closer to You strategy, now assumes strategic responsibility for the company’s customers across its businesses. He will oversee e-commerce, digital operations, marketing, credit and the Nordy Club loyalty program.

Nordstrom’s digital businesses represented 42 percent of the company’s total in 2021. Mr. Worzel, who has been Nordstrom’s chief operating officer since 2018, previously served as executive vice president, strategy and development, and chief digital officer.

Jamie Nordstrom, who will continue as president of Nordstromstores, a position he has held since 2014, will add oversight of operations strategy and execution for Nordstrom Rack to his responsibilities.

Mr. Nordstom will focus on bringing together the company’s store operations with its merchandising and supply chain functions. He will benefit from an expanded team of senior leaders with off-price experience.

DISCUSSION QUESTIONS: What do you see as the pros and cons of Nordstrom’s plan to consolidate its leadership team for its full-line department stores and its Rack business? How likely is the new structure to produce meaningful results?

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"If both platforms are supposed to be under the same umbrella brand in consumers’ minds, a consolidated leadership strategy makes the most sense."

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19 Comments on "Nordstrom brings leadership for department stores and Rack under one roof"


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Carol Spieckerman
BrainTrust

I can’t see any drawbacks to Nordstrom’s decision to tighten up its leadership team. Nordstrom is one of the few softlines retailers that is still seen as a brand rather than just a place that sells brands. Consolidating leadership and operations for Rack and its full-line department stores will drive efficiencies and further safeguard brand integrity.

Neil Saunders
BrainTrust

Nordstrom Rack has been underperforming for a couple of years. The problem is mostly down to extremely poor assortments and a lack of inventory control which means some shops have way too much stuff and others don’t have nearly enough. A change of management may help remedy that, but it won’t do so automatically. As for consolidating off-price and department store leadership – there’s nothing wrong with that in principle. However of late, department stores have also suffered from extensive inventory issues. Moreover, while there should be some overlap – especially in passing down excess product and operations – the two concepts are very different and need to be run as distinct entities.

Nikki Baird
BrainTrust

I think this is a good move. Separate leadership requires a lot more coordination to maintain a single strategy – it’s too tempting, when your performance is evaluated on one particular chain, to make decisions that are good for Nordstrom Rack, for example, but run counter to the objectives of the company as a whole.

That said, it may mean more changes to come for Rack – most retailers who have pursued a separate approach to their off-price brand have attracted shoppers to that brand that will never make the leap to the full price store. With potentially two separate customers, what is there to make “seamless” about a unified experience?

So the question becomes, SHOULD they be two separate customers? Does off-price cannibalize full-price? Does it distract from focusing on full-price, with off-price only as a discount/inventory outlet? At the very least, considering them as parts of a whole, rather than two separate chains, should provide the focus to answer those questions.

David Naumann
BrainTrust

Good point about the same or separate customers. I think a lot of the Nordstrom Rack customers are also Nordstrom customers. There are a lot of synergies in customer experience, supply chain and operations that make consolidating the roles a smart strategy.

Georganne Bender
BrainTrust

I like the idea of the two teams working together to bring a single face to the Nordstrom brands. I have visited Nordstrom Rack on many occasions and other than the Nordstrom name over the door I could be in any off-price store. This move will initially create some territorial difficulties, but in the end will provide a better shopping experience for customers of both stores.

Paula Rosenblum
BrainTrust

This one is hard for me to see working. Of course, having one store operations group makes perfect sense. That should have been in place from the jump. No need to “merge the leadership team” to make that happen.

Experience has shown me that when you have an off-price group and a high-end group under one roof, off-price becomes a real distraction to the high-end group. It’s not the same product. This happens famously in the furniture business. I lived through it.

The things that will bring benefit are shared services — shared merchandising just can’t happen. And shared marketing isn’t right either.

Overall, I think what the company will end up with is the loss of two executives (in a division I thought was outperforming the mother ship), some shared services, and separated everything else.

Not what I would call tremendous synergies, particularly.

Bob Amster
BrainTrust

I trust that Nordstrom is not consolidating in order to save on salaries. Full-line and off-price businesses have their marked differences and the people at the top of it all will still have to have senior-level directors for each format. A silo in marketing may have been eliminated but operations and merchandising will be different.

Melissa Minkow
BrainTrust

We frequently advocate for online and offline strategy to be both aligned and overseen by the same leaders at the very highest level. Department store and off-price should be no different. If both platforms are supposed to be under the same umbrella brand in consumers’ minds, a consolidated leadership strategy makes the most sense.

Dick Seesel
BrainTrust

It makes sense to consolidate store operations, supply chain management and other behind-the-scenes functions that will be invisible to the customer. But if the consolidation extends to merchandising teams, that would be a mistake. The skill set needed to make product development and assortment choices for an upper-moderate to high-end store is not the same as for an off-pricer. Nordstrom’s brand image still need to look and feel like “Nordy’s,” providing a halo effect for the Rack business.

Dave Bruno
BrainTrust

One Nordstrom, one customer, regardless of where they shop seems like a very sound approach, and consolidating leadership across the brands will only help deliver on that promise.

DeAnn Campbell
BrainTrust

Anything that removes silos and unifies the view of the customer is a great thing in retail. Although Nordstrom and Nordstrom Rack may have a different customer base, having centralized leadership will enable a common brand message and help to differentiate Rack from other discount competitors. And the cost savings and increased speed offered by streamlining operations between these two entities will be substantial.

Doug Garnett
BrainTrust

This is smart on Nordstrom’s part. But where I remain concerned for them is they continue to fail in communication. This brand which once was crystal clear in the customer’s mind has lost that clarity which means fewer shoppers.

In truth, it appears to me that Nordstom needs to advertise – to communicate what it’s about and return meaning to its brand.

Gene Detroyer
BrainTrust

This makes some sense from an operational POV. Operational experts apply their skills to operations. It also makes it easy for Nordstrom to dump unsold products to Rack.

But I strongly disagree with bringing these two brands together for marketing and consumer thinking. For branding, I would eliminate the Nordstrom name from Rack all together. These are two different animals, with different strategies and a completely different purpose. Is Nordstrom Rack simply cheap Nordstrom?

Gary Sankary
BrainTrust

This is a great strategy in my opinion. The best retailers deliver consistent experiences for their customers, across all channels and brands.

storewanderer
Guest
4 months 10 days ago

Rack seems to be failing after years of being such a star. I would say they have mismanaged Rack, but maybe it is that the other off price competition just got too much better.

Also l think they over-expanded Rack, the issue not necessarily being the wrong locations but too many locations and they lost the ability to bring in enough of the unique high end hand down from the full Nordstrom product that people expected Rack to carry.

Also notice, not much talk about the small format here. What happened to that? Did it already get shelved?

Craig Sundstrom
Guest

Any retailer that operates an off-price component needs to decide how the character of the parent is carried thru to the sub; in the case of Nordstrom, where the traits were full service (and the higher prices such commands) this can present a considerable challenge.

I don’t see the plan as inherently bad or good, but not settling on a strategy and not knowing how to implement what you’ve decided on aren’t good; am I saying that’s what I think N has been doing? Well….

Brad Halverson
Guest

Another upside here is that having unified Nordstrom and Nordstrom Rack leadership will allow for potentially more cohesive decision making and visibility of what products would best move over to the Rack and when. Meaning, with more end-to-end assumptions and decision making, seeing signs of slow brand movers and predictability, ideal timing to hand over product with realistic gross margins and sales. Of course, ML (machine learning) could be a good partner in this effort.

Rachelle King
BrainTrust

Nordstrom is all about experience; Nordstrom rack, not so much. It is in the company’s best interest to provide a seamless brand experience, regardless of channel. This builds loyalty. This consolidation is long overdue.

Anil Patel
BrainTrust

I believe that Nordstrom and Nordstrom Rack are quite different from each other in terms of brand experiences, customer niche, and product, which was the real reason why the two separate leadership teams were established in the first place. So the real question here is, what will happen to the original strategies designed for Nordstrom Rack? Unifying business models here would mean Nordstrom leaders without a deeper understanding of Rack’s customers and brand needs, will be making decisions. And if those decisions don’t align with the brand experiences, it would hamper brand reputation in the long run and ultimately lead to negative customer experiences.

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Braintrust
"If both platforms are supposed to be under the same umbrella brand in consumers’ minds, a consolidated leadership strategy makes the most sense."

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